Being Filthy Rich Doesn’t Buy Happiness, But Raises Do

Folks who aren’t motivated by wealth will preach that money can’t buy happiness. Any Googler who made millions when his company stock went public might disagree. No matter which side you stand on, a new study published by the American Psychology Association shows that money can buy happiness. But it’s not Powerball winnings or a huge stock cash-out that brings joy; it’s a steadily growing income.

The study looked at a Gallup Worldwide Poll of 806,526 people in 135 countries from 2005 to 2011. People were asked to describe how satisfied they were with their life on a scale from zero (worst possible life) to 10 (best possible life), and report how much yearly income they earn and if they had access to food, shelter, TV, and the internet. In trying to understand the Easterlin Paradox – which says that as a country’s GDP rises, its citizens become happier – the researchers found that people are happier as their stable income rises. How much the overall economy rose or fell had nothing to do with it.

It’s not hard to see why a larger paycheck makes us happier. More money means stronger personal and financial security, better shelter, more food, and ultimately more products that make us feel better (or think we feel better). But income is only part of the equation, according to study author University of Illinois professor Ed Diener. And no, buying a Porsche isn’t what’s missing.

“We’ve found that rising income does lead to rising happiness, but it depends on people being optimistic, not having sky-high desires,” Diener says. That means, if you’re pining after a sporty ragtop or swank Tribeca loft that you can’t possibly afford, you’re probably not all that happy. Try saving for something within your reach and you’ll feel better, Diener says.

We already know that lottery winners aren’t happier, but Diener’s study paints us a clearer picture of why. While we believe that the wealthiest people in the world, with their private islands and endless shoe closets, are extraordinarily happy, it turns out it’s the ability to purchase things we desire, period, that makes the difference. It’s not the trophy island. According to Diener, “Increased wealth was primarily linked to improvements in well-being if people were able to purchase more material things, such as a television and access to the internet.” In other words, give us Netflix and a big screen, and most of us are happy as clams.

Diener explains that it was important to him to try and figure out if income makes us happy because we spend so much of our time killing ourselves over it. “Individuals spend more time working than in any other waking activity, and governments highly emphasize economic growth,” he says. So try and remember that the low-paying, entry-level job that makes you miserable today could be the key to your happiness tomorrow. Assuming your next gig pays enough to buy a big honkin’ TV, with loads of HDMI ports and Wi-Fi built in.